Scenario: Your company makes baby seats for cars and RVs. Your main product was designed some time ago, and new and better engineering data are now available, but your product has a good record with very few quality problems. Even in most crashes, the seats perform well. Still, the new information would allow you to upgrade the product significantly (about a 7% improvement). However, changing the manufacturing process would be a significant cost, which you are unlikely to recover because competing products are already cheaper than yours. You have a legal fiduciary responsibility to your company to maximize your profit. What should you do?
a) Do not make the improvements, because the buyer assumes the risk. Your product is already safe and has a positive rating from the consumer reporting agencies. The change would cost salary increases for your manufacturing personnel.
b) Make the data public information and put pressure on your competitors to also improve their products, pushing up their costs as well.
c) Recognize that your company has an absolute duty to make your product as safe as possible and institute the change. Freeze employee wages to pay for the improvements.
d) Change your advertising program from “The Safest Baby Seat That Can Be Made” to “One of the Safest Baby Seats Made,” avoiding issues surrounding implied and express warranties.
e) Attach a warranty sticker to the underside of the seat pad where few will see it, stating that the product is reasonably safe but is not guaranteed to be completely safe.

ScholarMatic: Explanation & Answer

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